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Kenya tyremaker issues profit warning on raw materials

NAIROBI, Nov 12 (Reuters) - Kenyan tyre maker Sameer Africa issued a profit warning for the year ending December on Friday and attributed it to rising raw material prices and unfavourable exchange rates. Sameer said in a statement to the Nairobi Stock Exchange that the cost of natural rubber, the main component of tyre manufacturing, had so far risen 40 percent in dollar terms this year compared with the fourth quarter of 2009. "The expected shortfall in earnings is attributed to the escalating world prices of raw materials used in manufacturing, particularly rubber," Sameer said. Sameer posted a pretax profit of 221.46 million shillings ($2.75 million) in the year ended December 2009, from 165.52 million in 2008. Its pretax profits for the six months to June stood at 71.9 million shillings from 61.87 million in the same period a year ago. Sameer said that due to difficult and highly competitive local and regional market conditions, the market was unable to take a full price adjustment due to the rise in raw material prices. It added that the depreciation of the Ugandan and Tanzanian shillings against the dollar was also a factor, while the Japanese yen's appreciation had made their imported tyres more expensive. "Our projection is the impact of the above factors will adversely affect our volumes, value and projected profits for the year ending ... December 2010," Sameer said. "While it is projected that the results will be positive, our earnings are expected to be lower than current market expectations for the year ending 31 December 2010." ($1=80.60 Kenyan Shilling) (Reporting by George Obulutsa; Editing by Jon Loades-Carter) (For more Reuters Africa coverage and to have your say on the top issues, visit: http://af.reuters.com/) Keywords: SAMEER/ (Email:nairobi.newsroom@reuters.com;Tel +254 20 2224 717) COPYRIGHT Copyright Thomson Reuters 2010. All rights reserved.

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